Taking Solace in an Earnings Challenged Coach

NEW YORK (TheStreet) -- It is very easy to be disparaging of Coach (COH) these days.

In 2013, including dividends, an investment in Coach shares witnessed a 3.1% ROI, as compared to 29.6% for the S&P 500, exclusive of dividends.

Perhaps the root cause of the quantitative disappointment has been the near-universal acknowledgement that Coach is no longer a very interesting place to shop, as Michael Kors (KORS) displaced it in the hearts and, more importantly, the literal and figurative pocketbooks of shoppers.

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The first hint of trouble presented itself in August 2011 when shares plunged 6.5% after announcing earnings, following years of running higher, that took only a short rest in June 2010. While shares went back to their old ways, climbing higher under CEO and Chairman Lew Frankfort, that climb came to a decided halt shortly after the Michael Kors IPO.

COH ChartCOH data by YCharts

In both 2012 and 2013 Coach knew only large price moves on earnings reports. The difference, however, was that in 2013, all but one of those large price moves were lower, with -16.1%, +9.8%, -7.8% and -7.5% earnings related responses greeting increasingly wary and frustrated shareholders.

Coach reports its second-quarter earnings on Jan. 22, 2014 prior to the market's open. The options market is implying a nearly 10% move upon that event, which comes on the heels of a 6.3% decline in shares in the past week.

For most, this would seem to be a good time to steer clear of Coach shares or even consider exiting existing positions, especially as the retail sector has been struggling to get consumers to part with their discretionary cash.

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